ESG Reporting, Financial Performance, and Organizational Resilience: Evidence from European Companies

The study investigates the association between sustainability reporting practices and the development of revenue per employee and profitability over a prolonged period, relative to companies that are less committed to reporting their sustainability performance. Using Welch’s t-test, we compared 247 listed European companies that disclosed sustainability performance information consistently over a 20-year period (2005–2024) with 172 other companies that either did not disclose sustainability performance or reported it intermittently. The comparison focused on financial performance and sales generated during the period under analysis. To test whether ESG scores have a beneficial effect on the development of the companies included in the study, we utilized panel data regression analysis with firm fixed effects and a correlated random-effects (Mundlak) specification including country and industry effects, with the 2007–2009 global financial crisis and the 2020–2021 COVID-19 pandemic modeled explicitly as shocks. The results indicate that organizations reporting ESG scores continuously exhibit modestly higher long-term profitability than companies in the control group, whereas changes in the ESG score level within firms are not associated with higher profitability, and neither the ESG score nor continuous reporting is associated with different profitability during the crisis periods. However, companies reporting ESG score information do not exhibit greater long-term development potential than those that do not engage in ESG score reporting. Overall, continuous ESG reporting is associated with modestly higher long-term profitability, while the study finds no direct evidence that ESG reporting improves performance during major economic shocks.